Starting Jan. 1, new rules go into effect to help simplify and clarify exactly what mortgage lenders will charge for a loan. The initiative, originating from the Department of Housing and Urban Development (HUD), requires that a new "Good Faith Estimate" form be given to all applicants. The new form makes it easy to compare loans from different lenders creating transparency for the consumer.
The main purpose is to give consumers the ability to compare, line by line, the fees and costs that might make one loan more attractive than another. It forces prospective lenders to enter their terms and fees into standardized fields so that the consumer can see what the loan is actually costing them side by side with another lender. Until now borrowers might have focused their attention on interest rates or monthly payments to decide on a mortgage. But fees play a big part in total cost and the new form helps put all of the information in the consumer's hands.
By seeing what one lender is charging compared to another in a standardized, simplified form it is a good step in creating transparency in hopes to make the decision a confident one for the buyer.
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